Some of my most interesting work in in helping clients create effective processes for participative strategy. The traditional approach to strategy is that it is generated in the executive suite or by highly-paid consultants, then it is communicated to staff, usually rather ineffectively.

There is an increasing recognition that many people across the organization have invaluable insights into industry change, competition, client requirements, innovation and other issues that will help shape strategy. The challenge is in establishing processes that enable broad-based participation in a useful way, tapping ideas and generating positive energy for change.

In some cases, for example as I helped a global real-estate development company to implement, this can be framed in a fun competition format, assisting teams to generate visions of where the company can go. In other cases, a formal process can be created to expose staff across the company to strategic issues, then generating, capturing, filtering, and applying their insights to corporate strategy, as I did for a large financial services company.

Here is an excerpt from Chapter 7 of my book Living Networks providing some of the broader issues to address in implementing participative strategy.

David Hain's insight:

So many so-called strategies are top-down, mostly completely ignored by everyone else. But it doesn't have to be that way, says futurist Ross Dawson...

Complex environments represent a continuous challenge for sensemaking in organizations. Continuous ambiguity exerts continuous pressures on organizations to modify their patterns of interaction, information flow and decision making. Organizations struggle to address situations that are precarious, explanations that are equivocal and paradoxical, and cognitive dilemmas of all kinds. This creates a demand for innovative approaches in sensemaking. Since agility is what is required in navigating complexity, we can call these new approaches “agile sensemaking.”

David Hain's insight:

This plea for a new way for organisations to organise makes sense to me, although I'm not surety agile branding will help to take root.

In the modern era, the pace of business is fast – but the pace of technological change is even faster.

As a result, the landscape of business risks is constantly shifting and changing, and both entrepreneurs and investors need to be on top of the potential factors that could disrupt their chances of success. At the same time, they also need to be prepared to address and mitigate new risks as they crop up.

David Hain's insight:

Interesting, and somewhat scary, analysis of mutations in the business risk environment. HT Trevor Lee.

Innovative organizations come in all shapes and sizes. Consider Hilcorp Energy, a privately owned oil and gas company, founded in 1989. It has more than 1,800 employees and operates assets producing over 300,000 barrels of oil equivalent per day (boe/day), all located in the United States. For the last six years, Hilcorp has been named among the top 100 best places to work by Fortune magazine and the Great Place to Work Institute; it is the highest ranked player in its sector on such lists.

What’s more, as CEO Greg Lalicker describes in this interview with McKinsey’s Peter Lambert, Hilcorp began embracing agile practices long before they were buzzwords, has put in place an innovative compensation system emphasizing fairness and shared rewards, and is comfortable that only half of the goals emerging from its planning process will be met. Hilcorp’s approach to strategy and the unique culture it has built since its founding by owner Jeff Hildebrand are thought provoking for leaders in any industry.

Employees fall into three groups when faced with change. Group 1 is open and willing to change and is often called the early adopters. Group 2 is uncertain and hesitant about change. Group 3 becomes entrenched and often will not change.

Depending on your organization and the type of change taking place, the distribution of employees in each group will vary. For simple changes with little impact, you may find that 90% of your employees fall into Group 1, 10% fall into Group 2 and no employees fall into Group 3. For complex changes that have a significant impact on individuals, the distribution may be much different, with a small fraction falling into Groups 1 and 3, and a large fraction into Group 2. Regardless of the distribution of employees into each group, the approach for managing resistance to change is similar.

Technology is changing everything. As digitization, advanced analytics, and artificial intelligence (AI) sweep across industries and geographies, they aren’t just reshaping the competitive landscape; they’re redefining the organizational imperative: adapt or die. The average large firm reorganizes every two to three years, and the average reorganization takes more than 18 months to implement. Wait and see is not an option; it’s a death sentence.

As a result, companies are beginning to experiment with increasingly radical approaches. We’re struck by a commonality among those who get it right: they create adaptive, fast-moving organizations that can respond quickly and flexibly to new opportunities and challenges as they arise. In doing so, they’re moving intelligent decision making to the front lines. That’s in sharp contrast to the standard, “safer” modus operandi of capturing data, sending it up a hierarchal chain, centrally analyzing it, and sending guidance back. Several of these forward-thinking organizations now starkly describe their decision making as being pushed to the “edges”—to and beyond employees, past the organization’s four walls, and out to consumers and partners. The process functions more like a network and less like a chain of command.

In this article, we’ll share these emerging elements of the organization of the future. While there is no set formula for success, we’ve seen versions of these elements at so many companies that we think they provide at least the organizational outline to win. Along the way, we’ll try to dispel some common misconceptions (too risky! too inefficient! too time consuming to set up!) of what such an organization really means. We know you don’t want your company to undergo yet another reorg—and another one a few years after that. Consider this a road map out.

David Hain's insight:

Could this really be the start of the end for endless reorganisation? I doubt it, but it's worth thinking about...

A useful starting point is to recognise that there are many different types of AI technology relevant to governments. These include machine learning, which essentially means making sense of patterns in data to better make predictions, and deep learning, the more recent form of machine learning that allows for more complex tasks to be performed. This part of AI has received the lion’s share of attention in recent years. But others that are relevant include computer vision, speech recognition and natural language processing, various data analytic tools (like model clustering, principal components analysis etc) and robotics (and this list is quite a helpful guide to AI functions that are already available in reality as opposed to blockbuster movies).

The promise

The promise of these various tools is to help governments make better informed decisions, whether at the level of policy, implementation or use of public services. They may make it easier to personalise services, particularly in medicine and healthcare; to predict and prevent problems such as water shortages; to enhance interactions through chatbots and cognitive assistants; and to augment human capabilities, for example of a fire officer entering a burning building. What follows is a list of ten major areas of likely change.

Anyone attempting to lead change in an organization knows to expect some resistance. Change is not a rational process; no matter how positive the future you are creating, it’s natural for humans to struggle with it.

Such resistance is no less frustrating for being predictable. At times, it can seem that all that stands between you and your goals are a few naysayers and whiners. And to those on a mission, such reactions can seem like putting one’s head in the sand. “The old business is not coming back,” one CEO told me. “We have to innovate or we will die.” Faced with negative remarks, critical questions, or stony silence, change champions naturally begin to interact more with those already on board, consciously or unconsciously distancing themselves from those who “don’t get it.

Gradually, a wall begins to form between “us” and “them” — champions who support the change, and resisters who openly or quietly oppose it. Unfortunately, approaching change with an “us versus them” mind-set actually increases pushback. When we think of people as resisters, we don’t truly engage with them. We tend to discount their perspective, assuming that if we are right, they must be wrong.

David Hain's insight:

People who resist change initiatives may be Luddites - or they may be Guardians, hold continue to see value in the way things are done. How you regard them will likely determine your approach, and your success rate!

Accomplish your goals.Working more doesn’t always mean getting more done. Startup expert Eric Ries and author Morten Hansen discuss how the tides are turning for businesses in the digital age, and how we can adjust our behavior to match.

David Hain's insight:

We're all busy today, sometimes too busy to work out whether we're working on the right things. A useful conversation on thinking about whether you really spend your time on activities that really move the needle.

The importance of design is only increasing. Consumers have instant access to global marketplaces and ever-higher expectations of service. They no longer distinguish between physical and digital experiences. This makes it increasingly difficult to make your product or service stand out from the crowd. As a result, design has become a CEO-level topic for many executives.

But while the concept of “design thinking” emerged as far back as 1969, and while many companies have tried to adopt its principles, relatively few have made true shifts in growth and profitability through design. Fewer still have been able to prove concretely the exact value of the design actions they’ve taken.

We have begun to explore the underlying design practices that allow some firms to succeed above others. Our research into global companies across multiple industries aims to uncover the connections between business value and design. Our early findings, presented in this article, are not yet statistically significant; we will continue to expand our data set in 2018 to reach that goal. But already some trends are evident. We see ten design actions across three themes that appear to correlate with improved financial performance.

David Hain's insight:

Design thinking becoming more embedded? Or just good business practice without the trendy name?

Steve Denning: In 2011, I wrote that the Shift Index was the most important business study ever. It’s great to have it updated, although disappointing to see that there has been continuing decline.

John Hagel: Hopefully, it’s a wake-up call. The core message is that technology is creating this mounting pressure to do things differently. It’s creating a world that is very different from the world that businesses have operated in the past. So until they figure out how to reconfigure their businesses and their operations, they are going to face mounting pressure and the deteriorating performance. The positive side is that the situation creates virtually unlimited opportunities if they can figure it out and adapt to the new world.

Hagel. Unfortunately the reaction of many companies when faced with mounting pressure is to do what they have always done, that is to squeeze harder on what they are currently doing, and try to squeeze more out of everybody. One of the most striking contrasts is the metric around labor productivity, which has been steadily increasing, versus the return on assets which has been plummeting.

David Hain's insight:

Useful dialogue on why Deloitte Shift Index shows that the return on assets continues to fall and what to do. Hint - it's not the same as you always did, only faster and harder...

A good conversation to take in Key for me "One of the things we see in the history of movements is the importance of action at the local level." Local leadership is a key to success in the new world of work

Today’s organizations and institutions are suffering from a severe case of responsiveness lag, where their internal structures, operating procedures and time signatures are increasingly out of sync with the external pace and scale of change. As Jack Welch, the legendary chief executive of General Electric, famously quipped: “If the rate of change outside exceeds the rate of change inside, the end is near.”

Today, organizations and institutions are disappearing at increasing rates because they are failing to adapt to the increasing complexity of the economic ecosystem. To survive digital Darwinism, organizations and institutions must evolve into ‘instant enterprises’ that maintain a perpetual state of readiness to respond to the unexpected.

David Hain's insight:

The case for a continuous approach to change, not one-off transformation. The change is the work!

In response to the financial crisis, US authorities tested how banks would perform under a variety of stresses, including a slumping economy, high unemployment, stock and bond market shocks, and foreign-currency gyrations. However, banks aren’t the only institutions that find themselves vulnerable when the external environment tosses a curveball. In recent years, power companies, oil and gas firms, healthcare operators, media firms, and others all have been subject to adverse scenarios that far exceeded their planners’ imagination. Using stress tests, managers can identify and mitigate potential shocks by turning over every rock to give extreme “what-ifs” a closer look.

David Hain's insight:

McKinsey suggests that stress tests should be used much more widely for risk management across organisational sectors.

As counterintuitive as this might sound, in corporate context, building a product that customers want is not enough to keep the project going. Managing stakeholders is equally important.There’s loads of content out there on this topic. And understandably so, for a topic relevant for project managers and product owners in many roles, not just in innovation. A simple Google search of the query ‘managing stakeholders’ returns about 10,600,000 results. By comparison, searching for ‘lean startup’ returns ‘only’ 4,400,000 results.In The Corporate Startup we present a workshop activity dedicated to stakeholder management. This post wishes to be an addition to that activity, looking at specific actions that you can take when managing stakeholders.

David Hain's insight:

Useful technique from Innov8rs for stakeholder mapping - never done enough at the outset in my experience. Use for diagnostic or planning purposes.

Simple answers make us feel safer, especially in disruptive and tumultuous times. But rather than certainty, modern leaders need to consciously cultivate the capacity to see more ­— to deepen, widen, and lengthen their perspectives. Deepening depends on our willingness to challenge our blind spots, deeply held assumptions, and fixed beliefs. Widening means taking into account more perspectives ­— and stakeholders — in order to address any given problem from multiple vantage points. Lengthening requires focusing on not just the immediate consequences of a decision but also its likely impact over time.

David Hain's insight:

Don't fall for the 'we make the complex more simple' spiel - good decision making requires a grasp of complexity.

Think of the plan as a guidance tool. The problem for many managers is that their expectations are all skewed from what can be realistically achieved via a strategic plan. Their image is more of the house-plan type or travel itinerary. They anticipate that by doing the necessary analysis and writing down how their business will succeed the world will be converted from uncertain to certain. In their eyes the strategic plan becomes a device for control rather than one of guidance. They’re not comfortable with the fluid and uncertain Moltke-the-Elder concept. This can manifest itself as “we’ve given up on strategic planning.” This emanated from a CEO whose experience in writing “it” all down was that he got it all “wrong” as things changed rapidly. In other similar situations executive teams find themselves simply ignoring any document that is produced.

David Hain's insight:

When it comes to strategic planning, the journey is more important than the destination - and the journey never ends!

First of all, organizations don’t change. People in organizations try something differently and then a movement is either created, or it isn’t. When that movement happens, it tends to evolve the way that it evolves. In the 1930s American sociologist Herbert Blumer described how social change happens and over the coming decades, his work inspired a number of people who shaped his ideas into these stages:Emergence: Someone is unhappy with the status quo and does something. There is little to no organization, and a pockets of “doers” emerge who disrupt the status quo.Coalescence: Small successes happen, and in the context of Agile transformation, “unofficial Agile people” emerge. Some internal “unofficial” meetups may happen and a little more structure emerges in the organizational network. A shared purpose, or goals start to develop.Bureaucratization: The Eye of Sauron is upon thee! At this point, someone high enough in the organization notices people are colouring outside the lines and they either support it, put a stop to it, or formalize it into the hierarchy. This may be the point when a VP of Agile/Innovation is hired.

David Hain's insight:

A savvy and perceptive assessment from the Happy Melly blog of traditional change management processes, and what potential change agents really need to know.

Many strategy planning processes begin with a memo like the one below. Such missives lead managers to spend months gathering inputs, mining data, scanning the marketplace for opportunities and threats, and formulating responses. In the strategy meetings that follow, the CEO leads discussions, executives jockey for resources, and a strategy emerges that confidently projects future growth. The budget is set—and then nothing much happens.

David Hain's insight:

This analysis of the shortcomings of strategic planning is on the money, imho! The solutions are good too, if challenging for many organisations.

Ten years ago, businesses were racing to understand and capitalize on concepts such as data mining, search technology, and virtual collaboration.

Today, digital transformation—which describes how digital technology is fundamentally changing the ways businesses operate and deliver value to customers—rules the roost and is disrupting companies everywhere, from their operating models to their infrastructures.

But that’s only part of the equation. “Digital transformation is actually a human transformation,” said Brian Solis, principal analyst at consulting and research company Altimeter. “We’ve learned that people have mistakenly overemphasized the role of technology in change. What this comes down to is leadership.”

With that in mind, we spoke with nine executives and thought leaders about what makes good leaders great, the habits that inform success, and specific skills they must hone to realize this transformation.

David Hain's insight:

Technology enables transformation - but leadership makes it happen! All of these habits are behavioural...

Traditionally, power in the entertainment industry came from the ability to control the creation and distribution of content, but new technologies have made this process easier. The scarce resource now is audience attention, and the power of digital entertainment platforms lies in having the data to manage and direct this attention. Today that data is primarily owned by Netflix and Amazon, but it may soon come from new platforms enabled by the mergers of NBCUniversal and Comcast, AT&T and Time Warner, and Walt Disney and Fox.

People may fear the trend of more media content coming from data-driven platform companies instead of industry insiders, from eggheads rather than creators. But the truth is that it lets the creators shine by finding an audience for their work, however esoteric it may be. Rather than killing creativity, perhaps big data is fostering a new golden age of creativity.

David Hain's insight:

The creative power of using data effectively - interesting story of Netflix.

Never before has it been so important for the C-suite to keep an eye on the macro and micro environment. Blink and you might have missed a seismic shift that could be cataclysmic. However, it’s not just the ability to maintain a forensic appreciation of the latest trends that are needed -- it’s the capability to adapt. But organizational change takes time -- particularly the decision making process behind the change. Therefore, a decision making framework through which all opportunities are assessed relative to the organization and external factors is probably the one essential business process in today’s fast-paced landscape.

David Hain's insight:

Some useful models for strategic decision making in a 'blink and you've missed it' environment.

Any company can follow the same path as these successful firms, and an increasing number of companies are doing just that. If you join them, you will need to cultivate the ability to translate the strategic into the everyday. This means linking strategy and execution closely together by creating distinctive, complex capabilities that set your company apart, and applying them to every product and service in your portfolio. These capabilities combine all the elements of execution — technology, human skills, processes, and organizational structures — to deliver your company’s chosen value proposition.

How do you accomplish this on a day-to-day basis? How do you get the strategists and implementers in your company to work together effectively? These 10 principles, derived from our experience at Strategy&, can help you avoid common pitfalls and accelerate your progress. For companies that truly embrace strategy through execution, principles like these become a way of life.

David Hain's insight:

Strategy/Execution. Most of my clients treat this as either/or. Working out how to make it 'and' is a critical differentiator.

Congratulations! Your organization is performing at or near the top of its game, or it has been in the recent past. Perhaps even better, you have a strategy to improve in the near future. Now for the bad news: the good news won’t last.

It can’t—at least without the right kind of organization. Across industries, barely half of the top performers sustain their leadership position over the course of a decade, according to research by our colleagues in McKinsey’s Strategy Practice. The challenges in maintaining dominance are not new; even sectors that digitization has not consigned to oblivion have seen flagships such as Delta Airlines, General Motors, and Owens Corning move from the top into Chapter 11 and then back into leadership positions again.

Over the past several decades, the business world has relentlessly pursued efficiency-driven business process reengineering, seeking to integrate, standardize, and automate tasks in ways that can reduce costs, increase speed, and deliver more predictable outcomes. As the landscape shifts, perhaps it’s time for organizations to expand their focus beyond business process reengineering to pursue business practice redesign, helping frontline workgroups to learn faster and accelerate performance improvement, especially in environments that are shaped by increasing uncertainty and unexpected events. The perspective we outline here goes beyond the growing work done on high-performing teams and agile practices by focusing specifically on the practices necessary to accelerate performance improvement over time.

David Hain's insight:

With virtually nothing left to cut, do businesses need to switch from redesigning business processes to redeveloping the business culture? The argument too do so is pretty compelling. The challenges of doing so are numerous and difficult!

In researching my book, Mapping Innovation, I found that every innovation strategy fails eventually, because innovation is, at its core, about solving problems — and there are as many ways to innovate as there are types of problems to solve. There is no one “true” path to innovation.

Yet all too often, organizations act as if there is. They lock themselves into one type of strategy and say, “This is how we innovate.” It works for a while, but eventually it catches up with them. They find themselves locked into a set of solutions that don’t fit the problems they need to solve. Essentially, they become square-peg companies in a round-hole world and lose relevance.

We need to start treating innovation like other business disciplines — as a set of tools that are designed to accomplish specific objectives. Just as we wouldn’t rely on a single marketing tactic or a single source of financing for the entire life of an organization, we need to build up a portfolio of innovation strategies designed for specific tasks.

It was with this in mind that I created the Innovation Matrix to help leaders identify the right type of strategy to solve a problem, by asking two questions: How well can we define the problem? and How well can we define the skill domain(s) needed to solve it?

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